Do I or Don’t I: The “Send it To Auction” Gamble

Feb 25 2010

It happens to me every few days.   There is an email saying “Congratulations, someone has made an offer on xxxxxx”  I set my minimum offers low on many of my domains for two reasons.  One, I’m open to any offer regardless of how low, it only takes a few minutes to say no.  Two, in the info about each domain there is a “previous offers for this domain” section and I like it to look like it’s in high demand.  They don’t know that it’s a $10,000 domain that’s received 40 $200 offers.

Here lies the fun and games.  I feel that Sedo auctions represent the closest thing to the true value of a domain. Sure, there are good and bad deals that pass through but in general, it’s worth what it sells for on Sedo. When you get an offer at Sedo you can negotiate.  At any point you receive an offer from the other party you can send it to auction.  If you counter offer and they don’t respond or cancel the negotiation, you cannot send it to auction.  Once they have made an offer you can either counter, take the offer, or send it to auction with the guaranteed sale to the original bidder  if the domain doesn’t receive a higher bid.  This sounds like a no brainer if the offer is high enough.  You would think you have nothing to lose….except that 50% of the time if you send it to auction and get no bids, the original offer never pays….ie backs out.

This where the art of the Sedo negotiation comes in.   You have to know the real value of the domain .  If the true value is much higher than the bid and they walk away on your counter, then you did fine.  If you get greedy and counter too high and they walk away, you lost money.  If you take the offer and it’s less that the real value and you could have sent it to auction, you lost money. If you received a fair value, sent it to auction and received no bids and they walk away, you lost money.  If you received an OK bid, sent it to auction and the price went for a lot more,  you played it perfect.

What I’ve found with most domainers is they really have no idea of the value of their domain.  They leave so much money on the table thinking it’s worth more money than it is. I’m not talking premium generics, I’m talking about the rest.  Those $500-$2000 domains or especially those $200-$1000 domains.  They paid $100, could walk away with $500 and they get greedy.  Any other business would die for 50% return but not domainers, most won’t sell for less than hundreds of percent return.  In my opinion, you play the Sedo offer correctly and you will always win or at least you will always receive a fair price.  The key to how much or if you make money is what you paid.

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Outsmarting the Dumb, Outworking the Smart

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1 comment

  1. DNyap

    The opposite can happen. Last week I received a Sedo $1,000 offer for a .com domain which I was going to drop. I sent it to auction in shock and received no more bids.

    I should have investigated and discovered that the buyer is selling something (no TM issues) with the same name. With hindsight, there was no competition, so an auction was a waste of time, the buyer just wanted this exact domain.

    Luckily the sale completed at $1,000, but I can’t help thinking what would have happened if I countered with $1m 🙂

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